In a recent announcement, Finance Minister Chrystia Freeland unveiled significant measures aimed at easing the path to homeownership for first-time buyers across Canada. Effective August 1, the federal government will extend the allowable amortization period for insured mortgages on newly constructed homes to 30 years, a welcome relief for many aspiring homeowners grappling with soaring housing costs.
Freeland emphasized the pressing need to address the housing affordability crisis, acknowledging the challenges faced by younger Canadians amidst a landscape of limited housing options and escalating rent and home prices. “Faced with a shortage of housing options and increasingly high rent and home prices, younger Canadians understandably feel like the deck is stacked against them,” Freeland stated in a news release.
The extension of the mortgage amortization period is poised to make monthly mortgage payments more manageable for young Canadians striving to achieve homeownership. Currently, under existing regulations, the longest allowable amortization period for mortgages with a down payment of less than 20 percent is capped at 25 years. However, with the extension to 30 years, aspiring homeowners will benefit from increased affordability and flexibility in managing their mortgage payments.
Additionally, the government announced a substantial increase in the amount first-time homebuyers can withdraw from their Registered Retirement Savings Plans (RRSPs) for home purchases, raising the limit from $35,000 to $60,000. This change, set to take effect on April 16, aligns with the government’s commitment to supporting Canadians in overcoming the formidable barriers to homeownership. Recognizing the evolving landscape of housing affordability, the government aims to facilitate access to homeownership by addressing the growing disparity between down payment requirements and savings capacity.
Furthermore, the government announced amendments to the Canadian Mortgage Charter, introducing provisions that expect financial institutions to offer permanent amortization relief to eligible homeowners facing financial hardship. This initiative underscores the government’s commitment to safeguarding existing homeowners and ensuring their ability to maintain homeownership amidst economic uncertainties.
The announcement comes in conjunction with the First Home Savings Account (FHSA) program launched last year, designed to empower prospective homebuyers to save for their first home over a 15-year period. With more than 750,000 Canadians already enrolled in the FHSA program, the government’s efforts to promote homeownership continue to gain momentum, offering tangible support to individuals striving to enter the housing market.
Overall, these comprehensive measures represent a significant step forward in the government’s efforts to address the housing affordability crisis and empower first-time buyers across Canada. By extending mortgage amortization periods and enhancing RRSP withdrawal limits, the government aims to make the dream of homeownership a tangible reality for Canadians across diverse socioeconomic backgrounds. As the housing landscape continues to evolve, these initiatives stand as a testament to the government’s commitment to fostering a more inclusive and accessible housing market for all Canadians.
Give your Mortgage Professional a Call Today
It may feel as if finding a solution to your current situation can be difficult. There are many individual factors that will affect your mortgage. If you would like to schedule a consultation, or simply want to give us a call, we are happy to help in any way we can. Even if it’s to provide a little peace of mind during these complicated times.
Contact one of our mortgage professionals today by calling 604-889-7343 or send us an email at info@themortgageprofessionals.ca
Click here to visit our Instagram, where we post the latest news & tips in the mortgage world.